FOMC saw specter of depression, deflation

A very sobering forecast by the Federal Reserve-Lou

FOMC saw specter of depression, deflation
By Rex Nutting

WASHINGTON (MarketWatch) - Members of the Federal Open Market Committee at their mid-December meeting saw mounting risks of depression and deflation as they grappled with employing new tools to stabilize an economy that was rapidly weakening, according to truncated minutes of the meeting released on Tuesday. Some participants at the meeting saw "the distinct possibility of a prolonged contraction, although that was not judged to be the most likely outcome," the minutes said. Inflationary pressures were likely to dissipate, and "some members saw significant risks that inflation could decline and persist for a time at uncomfortably low levels